According to a recent market report, the global Unified Communication-as-a-Service (UCaaS) market is expected to grow at a CAGR of 23.5% from $38.74 billion in 2020 to $169.63 billion by 2027. Leading UCaaS service provider RingCentral (NYSE: RNG) recently announced its fourth-quarter results that continued to surpass market expectations.

RingCentral’s Financials

RingCentral’s fourth-quarter revenues grew 32% to $335 million, significantly ahead of the market’s forecast of $317.4 million. Non-GAAP net income per diluted share was $0.29, ahead of the Street’s estimates of $0.27.

By segment, software subscriptions revenue increased 34% to $306 million. Other revenues grew 16% to $28.8 million.

Among key metrics, Annualized Exit Monthly Recurring Subscriptions (ARR) grew 35% to $1.3 billion. RingCentral Office ARR increased 39% to $1.2 billion. Mid-market and Enterprise ARR, defined as customers with $25,000 or more in ARR, increased 49% to $713 million. Enterprise ARR, defined as customers with $100,000 or more in ARR, increased 55% to $454 million. Channel ARR increased 59% to $465 million.

RingCentral ended the year with revenues growing 31% to $1.2 billion. Adjusted net income per diluted share was $0.98, compared to $0.82 in 2019.

For the first quarter, RingCentral expects revenues of $337-$340 million, representing an annual growth of 26% to 27%. It expects subscription revenues of $311.5-$315.5 million, representing an annual growth of 28-29%. Non-GAAP EPS is expected to be $0.24-$0.257. For the full year, it expects revenues of $1.475-$1.490 billion, representing an annual growth of 25% to 26%. Non-GAAP EPS is expected to be $1.20 to $1.24.

RingCentral’s Growth Focus

During the quarter, RingCentral announced its acquisition of California-based DeepAffects. Founded in 2017 by Prashant Kukde and Sushant Hiray, DeepAffects creates intelligent technology that uses human speech conversations, emotional cues, and intents to respond to humans. Prior to the acquisition, DeepAffects had raised $200,000 in a round of funding from VDOSH. RingCentral plans to leverage the acquisition to provide enhanced pre-meeting, in-meeting, and post-meeting experiences for its customers. The terms of the deal were not disclosed.

RingCentral also entered into a partnership with Vodafone Business to create a new co-branded cloud-based service that will become the lead UCaaS solution for Vodafone Business and allow Vodafone to offer the CCaaS to its customers. By combining RingCentral’s UCaaS and CCaaS expertise with Vodafone Business’ reach and scale, the platform will provide flexible, easy-to-use, and secure services. Together, the companies will drive product roadmap, innovation, sales enablement, and go-to-market. Both companies will create a joint development capability, while also leveraging the RingCentral open API platform for custom integrations.

RingCentral continued its offering upgrades by launching RingCentral Glip, a free, unlimited, easy-to-use solution that offers high quality and high-availability video and audio conferencing, and seamlessly integrates team messaging, file sharing, contact, task, and calendar management – to deliver a Smart Video Meetings experience. The service includes innovative pre-meeting, in-meeting, and post-meeting capabilities – all for free and provides a completely integrated team collaboration capability.

RingCentral continues to rely on partnerships to drive growth. As I have mentioned earlier, RingCentral needs to focus on exploring an ISV PaaS strategy that can further expand its product ecosystem and help build a developer ecosystem and marketplace around it. It currently relies on an API-based capability that allows developers to easily and quickly embed communications into their enterprise applications. Its API library offers developers direct access to communication information related to voice, SMS, fax, account configuration, and communications data for RingCentral customers. The company currently has more than 20,000 developers working on its API who have built more than 2,000 integrations.

Its stock is currently trading at $371.45 with a market capitalization of $33.3 billion. It touched a 52-week high of $449.00 earlier this month. It was trading at a 52-week low of $134.85 in March of last year.